Mon, Jan 10, 2005 - Page 10 News List

Bank of Beijing to sell 25% stake to foreign institutions


The Bank of Beijing (北京銀行) said it is in talks with overseas financial institutions that may result in at last two foreign banks taking a combined 24.98 percent stake in the 16th biggest of China's city commercial lenders.

"We may finish the negotiations and sign deals as early as March," chairman Yan Bingzhu (閻冰竹) told a press briefing called to announce the official change in the bank's name from Beijing City Commercial Bank last week.

"After that, we will prepare for an initial share offer, and I think we will go public within two years," Yan said. "I am sure we will expand our bank outside of Beijing in the next few years."

He said in an interview after the briefing that the bank will probably go public by selling shares at home, not abroad. He gave no other details.

China's banking regulator last year allowed the nation's city commercial banks to expand outside their home bases for the first time, making them more attractive to overseas banks.

Household savings at Chinese banks reached a record US$1.5 trillion at the end of November.

"City commercial banks, especially those in big cities, are attractive to foreign investors because they are smaller and cost less to invest in," said Wu Yonggang (吳勇剛), an analyst at Guotai Junan Securities Co (國泰君安證券) in Shanghai.

The Bank of Beijing said pretax profits last year rose to 2.39 billion yuan (US$288 million) from 1.85 billion yuan in 2003.

Assets totaled 209 billion yuan (US$25.2 billion) at the end of last year, while outstanding loans stood at 109.6 billion yuan and deposits were 189 billion yuan.

The bank's bad-loan ratio at the end of last year was 4.8 percent and the capital-adequacy ratio was 8.36 percent, Yan told reporters.

Foreign banks are seeking partners in China as the nation opens up its financial services sector under provisions of its entry into the WTO in December 2001.

HSBC Holdings Plc, Europe's biggest bank by market value, agreed last August to acquire 19.9 percent of Shanghai's Bank of Communications (交通銀行), which is the country's fifth-biggest lender.

The Commonwealth Bank of Australia, the nation's second-biggest lender, agreed to buy 11 percent of China's eighth-biggest city commercial bank in September, and then entered talks to buy a stake in a second Chinese city lender in November.

The Commonwealth Bank last year won regulatory approval for its purchase of a stake in Jinan City Commercial Bank (濟南城市商業銀行) and has an option to buy a total of one-fifth of that lender. Hangzhou Bank (杭州銀行) in Zhejiang Province said the Commonwealth Bank is also negotiating to buy a stake in it.

The Bank of Nova Scotia won approval last September from Chinese regulators to raise its stake in the Xi'an City Commercial Bank to as much as 12.5 percent.

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